SC Questions Centre Over High Drug Markups, Asks Where the Large Margins Go

Summary:
The Supreme Court has questioned hospitals over medicine markups of up to 10 times, including on cancer drugs, and suggested a uniform 16% margin across medicines. The bench asked the Centre to examine allegations that corporate hospitals require patients to buy medicines from designated pharmacies and noted that such costs ultimately burden patients and taxpayers. The case involves petitions seeking greater control over medicine prices, particularly for cancer and kidney-related treatments, with the court also questioning large price differences such as a Rs 2,700 retailer price versus a Rs 27,000 MRP. The Centre has sought two weeks to examine the issue, with the Supreme Court scheduled to hear the matter again on October 12. 

The Supreme Court on Tuesday raised concerns over hospitals charging markups of up to 10 times on medicines, including cancer drugs, and suggested that a uniform 16 per cent margin should apply to all medicines.

A bench comprising Justice Vikram Nath and Justice Sandeep Mehta asked the Centre to examine complaints that hospitals require patients to purchase medicines from their own pharmacies. The bench observed that ordinary patients ultimately bear the burden of such practices.

The court pointed out to Solicitor-General Tushar Mehta, who was representing the Centre, that a cancer medicine supplied to retailers for Rs 2,700 was being sold with an MRP of Rs 27,000.

The bench also criticised the practices of corporate hospitals and questioned the lack of concern within the pharmaceutical sector.

The matter arose from two petitions filed by advocate Kishan Chand Jain and Dr Sanjay Kulshresthra, seeking measures to control the increasing prices of medicines, including both essential and non-essential drugs, particularly medicines used for cancer and kidney-related conditions.

The bench questioned the Centre’s distinction between essential and non-essential medicines and asked why a 16 per cent MRP margin could not be applied uniformly across all medicines.

The court said such pricing ultimately places a burden on taxpayers, highlighting the example of an essential cancer medicine carrying an MRP of Rs 27,000 despite having a price to retailer (PTR) of only Rs 2,700.

Solicitor-General Mehta said he would consult the concerned officials and acknowledged that the matter required consideration.

Justice Mehta also directed attention to allegations that corporate hospitals compel patients’ families to purchase medicines from their designated chemists or specific pharmacies. He noted that hospitals may not assure continued treatment if patients obtain the prescribed medicines from outside pharmacies.

The judge further questioned who bears the cost when a patient receiving treatment under a government scheme is involved, pointing out that such expenses are ultimately reimbursed through taxpayer-funded resources and therefore warrant a uniform approach.

Justice Mehta observed that the pricing disparity could even create doubts among patients about the authenticity of medicines. He noted that if a pharmacist offers a cancer drug to a needy patient for Rs 2,700, the patient might question whether the medicine is genuine.

The bench questioned the reason behind the 10-fold markup and asked where the substantial difference in price ultimately goes and who benefits from it. It said taxpayers ultimately bear the loss and that the matter deserved detailed examination because it affects a significant section of society.

Solicitor-General Mehta said it appeared that private hospitals, rather than pharmaceutical companies, could be benefiting from the high margins. He requested two weeks to discuss the matter with government officials.

Justice Mehta also cited the price difference between a basic statin costing around Rs 40 and the same medicine combined with aspirin costing approximately Rs 70. He questioned how such pricing practices could occur and said corporate hospitals appeared to be operating as commercial establishments rather than purely as healthcare service providers.

The solicitor-general said he was not suggesting that the petitioners were incorrect, but added that a solution balancing the interests of all parties would need to be developed. He reiterated that, based on his understanding, pharmaceutical companies were not necessarily the beneficiaries of the additional margins.

The Supreme Court scheduled the matter for further hearing on October 12 and said it would consider the Centre’s response at that stage.